Morgan Stanley Sees Recession Within a Year If Trade War Gets Any Worse

Investors may still be underestimating the full risk to the global economy from a trade war, even after U.S. stocks capped the worst month of the year. A recession could begin in as soon as nine months if President Donald Trump pushes to impose 25% tariffs on an additional $300 billion of Chinese exports and China retaliates with its own countermeasures, according to Chetan Ahya, chief economist and global head of economics at Morgan Stanley. "My recent conversations with investors have reinforced the sense that markets are underestimating the impact of trade tensions," Ahya wrote in a note. "Investors are generally of the view that the trade dispute could drag on for longer, but they appear to be overlooking its potential impact on the global macro outlook."-Bloomberg

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